BILL NUMBER: AB 634	CHAPTERED  09/21/99

	CHAPTER   442
	FILED WITH SECRETARY OF STATE   SEPTEMBER 21, 1999
	APPROVED BY GOVERNOR   SEPTEMBER 21, 1999
	PASSED THE ASSEMBLY   AUGUST 30, 1999
	PASSED THE SENATE   AUGUST 25, 1999
	AMENDED IN SENATE   AUGUST 24, 1999
	AMENDED IN SENATE   AUGUST 17, 1999
	AMENDED IN SENATE   JULY 12, 1999
	AMENDED IN SENATE   JULY 1, 1999
	AMENDED IN ASSEMBLY   APRIL 21, 1999
	AMENDED IN ASSEMBLY   APRIL 5, 1999

INTRODUCED BY   Assembly Member Wildman

                        FEBRUARY 23, 1999

   An act to amend Section 53895 of the Government Code, and to amend
Sections 33080.1, 33080.2, 33334.12, and 33672.5 of, and to add
Section 33121.5 to, the Health and Safety Code, relating to
redevelopment.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 634, Wildman.  Local agencies:  redevelopment:  use of funds
and delegation.
   (1) The Community Redevelopment Law requires a redevelopment
agency to present annually an audit report to its legislative body,
and requires the agency to expend or encumber excess surplus, as
defined, in its Low and Moderate Income Housing Fund.
   This bill would require a redevelopment agency to submit to its
legislative body any audit undertaken by another governmental agency;
would revise the information required to be included in the annual
report, including requiring the report to include a calculation of
the excess surplus in the fund; and would revise the definition of
excess surplus to exclude the unspent portion of the proceeds of
bonds or indebtedness and related income.  The bill would require the
legislative body to review those reports and take appropriate
action, thereby creating a state-mandated local program.
   The bill would require the Department of Housing and Community
Development to develop and periodically revise the methodology to be
used in the calculation of excess surplus, as specified.
   By imposing these new requirements on local agencies, the bill
would create a state-mandated local program.
   The bill would provide that when a decision, determination, or
other action by the agency or legislative body is required by the
Community Redevelopment Law, neither the agency nor the legislative
body shall delegate the obligation to decide, determine, or act to
another entity unless a provision in this law specifically provides
for that delegation.
   The bill would make other clarifying and nonsubstantive technical
changes.
   (2) Existing law requires the county auditor, upon request of a
redevelopment agency, to provide a statement each fiscal year
concerning the allocation of taxes to the redevelopment agency and
other agencies.
   This bill would require that statement to specify the gross amount
of tax-increment revenue allocated to the redevelopment agency and
any payments to other taxing agencies, thereby imposing a
state-mandated local program.
  (3) This bill would incorporate additional changes in Section
33080.2 of the Health and Safety Code proposed by SB 497, to be
operative if SB 497 and this bill are both enacted and become
effective on or before January 1, 2000, and this bill is enacted
last.
   (4) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement, including the creation of a State Mandates Claims Fund
to pay the costs of mandates that do not exceed $1,000,000 statewide
and other procedures for claims whose statewide costs exceed
$1,000,000.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 53895 of the Government Code is amended to
read:
   53895.  (a) An officer of a local agency who fails or refuses to
make and file his or her report within 20 days after receipt of a
written notice of the failure from the Controller shall forfeit to
the state:
   (1) One thousand dollars ($1,000), in the case of a local agency
with total revenue, in the prior year, of less than one hundred
thousand dollars ($100,000), as reported in the Controller's annual
financial reports.
   (2) Two thousand five hundred dollars ($2,500) in the case of a
local agency with total revenue, in the prior year, of at least one
hundred thousand dollars ($100,000) but less than two hundred fifty
thousand dollars ($250,000), as reported in the Controller's annual
financial reports.
   (3) Five thousand dollars ($5,000) in the case of a local agency
with total revenue, in the prior year, of at least two hundred fifty
thousand dollars ($250,000), as reported in the Controller's annual
financial reports.
   (b) Upon the request of the Controller, the Attorney General shall
prosecute an action for the forfeiture in the name of the people of
the State of California.
  SEC. 2.  Section 33080.1 of the Health and Safety Code is amended
to read:
   33080.1.  Every redevelopment agency shall submit the final report
of any audit undertaken by any other local, state, or federal
government entity to its legislative body within 30 days of receipt
of that audit report.  In addition, every redevelopment agency shall
present an annual report to its legislative body within six months of
the end of the agency's fiscal year.  The annual report shall
contain all of the following:
   (a) (1) An independent financial audit report for the previous
fiscal year.  "Audit report" means an examination of, and opinion on,
the financial statements of the agency which present the results of
the operations and financial position of the agency, including all
financial activities with moneys required to be held in a separate
Low and Moderate Income Housing Fund pursuant to Section 33334.3.
This audit shall be conducted by a certified public accountant or
public accountant, licensed by the State of California, in accordance
with Government Auditing Standards adopted by the Comptroller
General of the United States.  The audit report shall meet, at a
minimum, the audit guidelines prescribed by the Controller's office
pursuant to Section 33080.3 and also include a report on the agency's
compliance with laws, regulations, and administrative requirements
governing activities of the agency, and a calculation of the excess
surplus in the Low and Moderate Income Housing Fund as defined in
subdivision (g) of Section 33334.12.
   (2) However, the legislative body may elect to omit from inclusion
in the audit report any distinct activity of the agency that is
funded exclusively by the federal government and that is subject to
audit by the federal government.
   (b) A fiscal statement for the previous fiscal year that contains
the information required pursuant to Section 33080.5.
   (c) A description of the agency's activities in the previous
fiscal year affecting housing and displacement that contains the
information required by Sections 33080.4 and 33080.7.
   (d) A description of the agency's progress, including specific
actions and expenditures, in alleviating blight in the previous
fiscal year.
   (e) A list of, and status report on, all loans made by the
redevelopment agency that are fifty thousand dollars ($50,000) or
more, that in the previous fiscal year were in default, or not in
compliance with the terms of the loan approved by the redevelopment
agency.
   (f) A description of the total number and nature of the properties
that the agency owns and those properties the agency has acquired in
the previous fiscal year.
   (g) Any other information that the agency believes useful to
explain its programs, including, but not limited to, the number of
jobs created and lost in the previous fiscal year as a result of its
activities.
  SEC. 3.  Section 33080.2 of the Health and Safety Code is amended
to read:
   33080.2.  The legislative body shall review any report submitted
pursuant to Section 33080.1 and take any action it deems appropriate
on that report no later than the first meeting of the legislative
body occurring more than 21 days from the receipt of the report.
  SEC. 3.5.  Section 33080.2 of the Health and Safety Code is amended
to read:
   33080.2.  (a) When the agency presents the annual report to the
legislative body pursuant to Section 33080.1, the agency shall inform
the legislative body of any major violations of this part based on
the independent financial audit report.  The agency shall inform the
legislative body that the failure to correct a major violation of
this part may result in the filing of an action by the Attorney
General pursuant to Section 33080.8.
   (b) The legislative body shall review any report submitted
pursuant to Section 33080.1 and take any action it deems appropriate
on that report no later than the first meeting of the legislative
body occurring more than 21 days from the receipt of the report.
  SEC. 4.  Section 33121.5 is added to the Health and Safety Code, to
read:
   33121.5.  When a decision, determination, or other action by the
agency or legislative body is required by this part, neither the
agency nor the legislative body shall delegate the obligation to
decide, determine, or act to another entity unless a provision of
this part specifically provides for that delegation.
  SEC. 5.  Section 33334.12 of the Health and Safety Code is amended
to read:
   33334.12.  (a) (1) Upon failure of the agency to expend or
encumber excess surplus in the Low and Moderate Income Housing Fund
within one year from the date the moneys become excess surplus, as
defined in paragraph (1) of subdivision (g), the agency shall do
either of the following:
   (A) Disburse voluntarily its excess surplus to the county housing
authority or to another public agency exercising housing development
powers within the territorial jurisdiction of the agency in
accordance with subdivision (b).
   (B) Expend or encumber its excess surplus within two additional
years.
   (2) If an agency, after three years has elapsed from the date that
the moneys become excess surplus, has not expended or encumbered its
excess surplus, the agency shall be subject to sanctions pursuant to
subdivision (e), until the agency has expended or encumbered its
excess surplus plus an additional amount, equal to 50 percent of the
amount of the excess surplus that remains at the end of the
three-year period.  The additional expenditure shall not be from the
agency's Low and Moderate Income Housing Fund, but shall be used in a
manner that meets all requirements for expenditures from that fund.

   (b) The housing authority or other public agency to which the
money is transferred shall utilize the moneys for the purposes of,
and subject to the same restrictions that are applicable to, the
redevelopment agency under this part, and for that purpose may
exercise all of the powers of a housing authority under Part 2
(commencing with Section 34200) to an extent not inconsistent with
these limitations.
   (c) Notwithstanding Section 34209 or any other provision of law,
for the purpose of accepting a transfer of, and using, moneys
pursuant to this section, the housing authority of a county or other
public agency may exercise its powers within the territorial
jurisdiction of a city redevelopment agency located in that county.
   (d) The amount of excess surplus that shall be transferred to the
housing authority or other public agency because of a failure of the
redevelopment agency to expend or encumber excess surplus within one
year shall be the amount of the excess surplus that is not so
expended or encumbered.  The housing authority or other public agency
to which the moneys are transferred shall expend or encumber these
moneys for authorized purposes not later than three years after the
date these moneys were transferred from the Low and Moderate Income
Housing Fund.
   (e) (1) Until a time when the agency has expended or encumbered
excess surplus moneys pursuant to subdivision (a), the agency shall
be prohibited from encumbering any funds or expending any moneys
derived from any source, except that the agency may encumber funds
and expend moneys to pay the following obligations, if any, that were
incurred by the agency prior to three years from the date the moneys
became excess surplus:
   (A) Bonds, notes, interim certificates, debentures, or other
obligations issued by an agency, whether funded, refunded, assumed,
or otherwise, pursuant to Article 5 (commencing with Section 33640).

   (B) Loans or moneys advanced to the agency, including, but not
limited to, loans from federal, state, or local agencies, or a
private entity.
   (C) Contractual obligations which, if breached, could subject the
agency to damages or other liabilities or remedies.
   (D) Obligations incurred pursuant to Section 33445.
   (E) Indebtedness incurred pursuant to Section 33334.2 or 33334.6.

   (F) Obligations incurred pursuant to Section 33401.
   (G) An amount, to be expended for the operation and administration
of the agency, that may not exceed 75 percent of the amount spent
for those purposes in the preceding fiscal year.
   (2) This subdivision shall not be construed to prohibit the
expenditure of excess surplus funds or other funds to meet the
requirement in paragraph (2) of subdivision (a) that the agency spend
or encumber excess surplus funds, plus an amount equal to 50 percent
of excess surplus, prior to spending or encumbering funds for any
other purpose.
   (f) Nothing in this section shall be construed to limit any
authority a redevelopment agency may have under other provisions of
this part to contract with a housing authority for increasing or
improving the community's supply of low- and moderate-income housing.

   (g) For purposes of this section:
   (1) "Excess surplus" means any unexpended and unencumbered amount
in an agency's Low and Moderate Income Housing Fund that exceeds the
greater of one million dollars ($1,000,000) or the aggregate amount
deposited into the Low and Moderate Income Housing Fund pursuant to
Sections 33334.2 and 33334.6 during the agency's preceding four
fiscal years.  The first fiscal year to be included in this
computation is the 1989-90 fiscal year, and the first date on which
an excess surplus may exist is July 1, 1994.
   (2) Moneys shall be deemed encumbered if committed pursuant to a
legally enforceable contract or agreement for expenditure for
purposes specified in Section 33334.2 or 33334.3.
   (3) (A) For purposes of determining whether an excess surplus
exists, it is the intent of the Legislature to give credit to
agencies which convey land for less than fair market value, on which
low- and moderate-income housing is built or is to be built if at
least 49 percent of the units developed on the land are available at
affordable housing cost to lower income households for at least the
time specified in subdivision (e) of Section 33334.3, and otherwise
comply with all of the provisions of this division applicable to
expenditures of moneys from a low- and moderate-income housing fund
established pursuant to Section 33334.3.  Therefore, for the sole
purpose of determining the amount, if any, of an excess surplus, an
agency may make the following calculation:  if an agency sells,
leases, or grants land acquired with moneys from the Low and Moderate
Income Housing Fund, established pursuant to Section 33334.3, for an
amount which is below fair market value, and if at least 49 percent
of the units constructed or rehabilitated on the land are affordable
to lower income households, as defined in Section 50079.5, the
difference between the fair market value of the land and the amount
the agency receives may be subtracted from the amount of moneys in an
agency's Low and Moderate Income Housing Fund.
   (B) If taxes that are deposited in the Low and Moderate Income
Housing Fund are used as security for bonds or other indebtedness,
the proceeds of the bonds or other indebtedness, and income and
expenditures related to those proceeds, shall not be counted in
determining whether an excess surplus exists.  The unspent portion of
the proceeds of bonds or other indebtedness, and income related
thereto, shall be excluded from the calculation of the unexpended and
unencumbered amount in the Low and Moderate Income Housing Fund when
determining whether an excess surplus exists.
   (C) Nothing in this subdivision shall be construed to restrict the
authority of an agency provided in any other provision of this part
to expend funds from the Low and Moderate Income Housing Fund.
   (D) The department shall develop and periodically revise the
methodology to be used in the calculation of excess surplus as
required by this section.  The director shall appoint an advisory
committee to advise in the development of this methodology.  The
advisory committee shall include department staff, affordable housing
advocates, and representatives of the California Redevelopment
Association, the California Society of Certified Public Accountants,
the Controller, and any other authorities or persons interested in
the field that the director deems necessary and appropriate.
   (h) Communities in which an agency has disbursed excess surplus
funds pursuant to this section shall not disapprove a low- or
moderate-income housing project funded in whole or in part by the
excess surplus funds if the project is consistent with applicable
building codes and the land use designation specified in any element
of the general plan as it existed on the date the application was
deemed complete.  A local agency may require compliance with local
development standards and policies appropriate to and consistent with
meeting the quantified objectives relative to the development of
housing, as required in housing elements of the community pursuant to
subdivision (b) of Section 65583 of the Government Code.
   (i) Notwithstanding subdivision (a), any agency that has funds
that become excess surplus on July 1, 1994, shall have, pursuant to
subdivision (a), until January 1, 1995, to decide to transfer the
funds to a housing authority or other public agency, or until January
1, 1997, to expend or encumber those funds, or face sanctions
pursuant to subdivision (e).
  SEC. 6.  Section 33672.5 of the Health and Safety Code is amended
to read:
   33672.5.  (a) Upon the written request of a redevelopment agency
for the purpose of assisting the agency, the county auditor or other
officer responsible for allocation of tax revenues pursuant to
Section 33670 shall prepare a statement each fiscal year, commencing
with the 1992-93 fiscal year, for each redevelopment project area and
each area added to a redevelopment project area by amendment, which
provides for all the following:
   (1) The total taxable assessed value of secured, unsecured, and
state-assessed railroad and nonoperating, nonunitary property.
   (2) The total taxable assessed value used by the county auditor to
determine the division of taxes required by subdivision (a) of
Section 33670.
   (3) The total taxable assessed value used by the county auditor to
determine the division of taxes required by subdivision (b) of
Section 33670.
   (4) The estimated amount of taxes calculated pursuant to
subdivision (b) of Section 33670, as adjusted by subdivision (e) of
Section 33670 and subdivision (a) of Section 33676.  The statement
shall specify the gross amount of tax-increment revenue allocated to
the agency and any payments to other taxing entities that are
deducted from the gross amount allocated.
   (5) The estimated amount of taxes to be allocated pursuant to
subdivisions (c) and (d) of Section 100 of the Revenue and Taxation
Code.
   (b) If requested to provide a statement pursuant to subdivision
(a), the county auditor shall deliver each statement to the
respective redevelopment agencies receiving property tax revenue on
or before November 30 of each year.
   (c) (1) Upon the request of a redevelopment agency pursuant to
subdivision (a), and concurrently with the disbursement of those
property tax revenues, the county auditor shall prepare a statement
which provides the amount of disbursement made pursuant to all of the
following:
   (A) Section 33670.
   (B) Section 100 of the Revenue and Taxation Code.
   (C) Supplemental property tax revenues allocated pursuant to
Sections 75 to 75.80 of the Revenue and Taxation Code, inclusive.
   (2) The statement provided pursuant to this subdivision shall also
include corrections, updates, or adjustments, if any, to the
property tax revenue amounts and taxable assessed values reported
pursuant to subdivision (a) of Section 33670.
   (d) The county auditor shall also provide to a redevelopment
agency, no later than 30 days after the receipt of a written request
from that agency, information or clarification with respect to any
statement issued pursuant to this section.
   (e) If any redevelopment agency requests a statement or
information pursuant to this section, the agency shall reimburse the
county auditor for all actual and reasonable costs incurred.
  SEC. 7.  The Legislature finds and declares that Section 33121.5 of
the Health and Safety Code, as added by Section 4 of this act, is
declaratory of, and does not constitute a change in, existing law.
  SEC. 8.  Section 3.5 of this bill incorporates amendments to
Section 33080.2 of the Health and Safety Code proposed by both this
bill and SB 497.  It shall only become operative if (1) both bills
are enacted and become effective on or before January 1, 2000, (2)
each bill amends Section 33080.2 of the Health and Safety Code, and
(3) this bill is enacted after SB 497, in which case Section 3 of
this bill shall not become operative.
  SEC. 9.  Notwithstanding Section 17610 of the Government Code, if
the Commission on State Mandates determines that this act contains
costs mandated by the state, reimbursement to local agencies and
school districts for those costs shall be made pursuant to Part 7
(commencing with Section 17500) of Division 4 of Title 2 of the
Government Code.  If the statewide cost of the claim for
reimbursement does not exceed one million dollars ($1,000,000),
reimbursement shall be made from the State Mandates Claims Fund.
